As a software engineer and system designer, I find it interesting to think of a practical way to address the current EVE design and performance crisis. Here are a few ideas that come to mind, which can work both as short term and long term solutions.
A) Shift large scale warfare into instanced encounters with hardware bound player limits.
EVE already has notions of grid, deadspace and beacons. Just add support for instanced deadspace encounters that can be run on a designated server, cluster, or server node. Extend them with polices, so that encounters could be arranged and agreed upon by all parties involved. E.g., if the encounter has 2000 player limit and is created for two battling alliances, each side can invite other parties it wishes to take a part in the event and if necessary redistribute their side of the player limit among them. Once some players drop out of the encounter, they can rejoin it or others can join in instead as long as the encounter is active and they match the set policy.
This simple option can be used as a foundation for Faction and Sovereignty Warfare. Just make it based around certain events or objectives that will be run in instanced, hop in / hop out, environments that will run with a measurable and predictable server performance within the set player and bracket limits.
It is a scalable option that can make the warfare manageable within the existing hardware infrastructure and extensible with new server clusters that can be rented or joined on demand.
The size of such deadspace encounters can vary as necessary, from the size of the grid to a certain AU limit, or maybe even spread across multiple pockets, so that it allows for various gameplay options within it.
B) Allow instanced encounters appear on maps and in system space via beacons.
Based on the type and set policies of the encounters, players would then be able to discover them and possibly join at will if the encounter allows it.
C) Introduce an escalation mechanic that can turn any local encounter into an instanced deadspace encounter once it reaches a certain player threshold.
Once any local engagement in a solar system escalates to a point where it becomes a burden for the server node, transform it into an instanced deadspace encounter. The policy of such escalations could be initially free-for-all, but there could be options for players to negotiate the policies of ongoing large scale encounters, for example through vote or diplomacy interfaces. The exact details of such transitions can be thought of further as necessary.
The deadspace in such instances can occupy the same location in the system where it originated, just appear in a sort of a parallel bubble that exists only as long as the encounter lasts. As with other such encounters, it can become visible via a beacon to other players in the system who may decide they want to join it if they wish so.